Oil Prices Fall As Rebels Enter Tripoli

Oil prices have fallen as markets spike ahead of a possible conclusion to unrest in Libya.

Brent crude oil stood at $107.20, down $2 in morning trading as markets expect a conclusion to Libyan unrest as rebels enter the capital Tripoli.

Oil production in Libya was around 1.6 million barrels a day before the unrest, making the country the 12th largest producer of oil in the world.

But production levels have fallen to around a tenth of capacity following the fighting, sending prices soaring in recent weeks as oil exports were hit.

Oil firm Agoco announced its oil fields in the east of Libya can restart production before the return of foreign workers, subject to security clearance.

Speaking to Sky News, Amrita Sen, oil analyst at Barclays Capital said: "It was very good quality crude oil coming from Libya, used to make diesel.

"That has really hit Europe and prices have gone up as a result."

Andrew Lipow, analyst and president of consultancy firm Lipow Oil Associates, said oil markets are likely to respond with "a sigh of relief that conflict has come to the end".

But he warned that it will take time for the market to erase the hefty price increase which resulted from the suspension of Libyan oil exports.

When the fighting broke out, oil was trading at around $84 a barrel before it quickly spiked above $93 and kept rising to a high above $110 by the end of April.

The FTSE rose almost 2% by lunchtime on hopes of increased oil supplies from Libya.

Elsewhere, European markets have rallied, with the German DAX was up 0.5% by noon, with the CAC 40 up 1.66%.

Elsewhere, gold reached another record high price, up 2.3% to $1,894.5 an ounce as investors looked for safer option in wake of uncertainty around the US economy.

Asian stock markets fell, with the Nikkei in Japan shedding 1% while the Kospi in South Korea slumped nearly 2% on closing.

The Japanese yen was close to its record level of 76.1 yen to the dollar set on Friday.